By Cynthia Ang
South African life insurers provided more than 458,000 policyholders with premium relief assistance to the value of over ZAR1bn ($58.4m) between March and July this year, in an effort to help policyholders whose earnings were impacted by the COVID-19 lockdown preserve their risk cover and savings policies, said the Association for Savings and Investment South Africa (ASISA).
Life insurers also paid claims and benefit payments of ZAR230bn to policyholders and their beneficiaries in the first half of this year, according to the half-yearly long-term insurance statistics gathered from ASISA members in line with new regulatory reporting requirements introduced by the Insurance Act of 2018.
ASISA Life and Risk Board Committee deputy chair Hennie de Villiers said the statistics showed that despite the impact of the significant premium relief afforded to policyholders and the sizeable claims and benefit payments made, the life industry remains in robust financial health and well capitalised to weather the prevailing tough economic environment.
Mr de Villiers added that the life industry held assets of ZAR3.1tn at the end of June 2020, while liabilities amounted to ZAR2.8tn. This left the industry with free assets of ZAR330bn, which is more than double the reserve buffer required by the new solvency capital requirements. The South African life insurance industry therefore remains well positioned to deal with economic pressures exacerbated by the COVID-19 pandemic, he said.
“This means that we can give policyholders and their beneficiaries the assurance that the industry is well positioned to weather this storm and that we will be able to honour every single valid claim,” said Mr de Villiers.
He explained that a healthy reserve buffer is of critical importance because it enables insurers to honour long-term promises made to policyholders. “When people buy our products, they have an expectation that we will honour their claim and maturity values, often only many years later, even when the unthinkable happens like the COVID-19 pandemic.”
Premium relief to consumers
ASISA members assisted policyholders who were in good standing, but suddenly unable to pay their monthly long-term insurance premiums due to COVID-19, in various ways, said Mr de Villiers. Relief measures included premium relief periods on savings policies of three to six months.
He added that in his experience, the majority of policyholders who were granted premium relief resumed their payments at the end of the premium relief period to ensure that their policies remained in force. According to Mr de Villiers, for many policyholders the COVID-19 pandemic drove home the true value of having long-term insurance cover in place.
Life insurers will continue to try and assist policyholders who may be struggling financially as a result of COVID-19 measures, but this will be done on a case-by-case basis, he said. “Policyholders who continue to face financial difficulties and who might not be able to afford their premiums at the end of their premium relief period should contact their financial adviser or insurer with urgency to discuss potential solutions.”
Asia Insurance Review